Deloitte Global Economic Outlook 3rd Quarter 2012 (PDF)

Deloitte Researchs Global Economic Outlook offers timely insights from Deloitte Researchs team of economists about the trends and events that are shaping the marketplace. This edition offers economic outlooks for the Eurozone, the United States, China, the United Kingdom, Japan, India, Russia, and Brazil.

Economic news from the Eurozone suggests that the euro crisis is probably more severe and deeper than ever. A combination of economic and political issues is threatening the viability of the Eurozone in its current form. The nature of the European Union implies that reforms will only take place in small steps.

A wide range of structural problems pose a continuing threat to economic growth in the United States. Three fundamental mechanisms are transmitting European problems into the U.S. economy.

The Chinese government is trying to strike a balance between the economic slowdown and its banks’ troubled balance sheets. Authorities are following a narrow path designed to minimize the downturn while avoiding a deeper financial crisis.

The British economy remains 4.3 percent smaller than its was in 2007. Given the headwinds coming from Europe and the continuing fiscal discipline of the British government, it is unlikely that things will improve much in the near term despite a more aggressive monetary policy.

The Japanese economy continues to swing dramatically between downturns and recoveries. External demand in Europe and China, reconstruction spending, changing monetary policy, and the possibility of a large tax increase may go a long way in dictating whether or not Japan can steady its growth engine.

The economic slowdown in India has been worse than many analysts expected. Uncomfortably high inflation and a steady depreciation of the rupee are inhibiting a quick recovery for the Indian economy. Furthermore, external headwinds and the government’s failure to implement market-friendly reforms are taking their toll on business sentiment in India.

The Russian economy is currently enjoying strong consumer demand, historically low inflation, and increased government spending on infrastructure. Unfortunately, these factors are likely to be overwhelmed by the recession in Europe, the slowdown in China, and the decline in the price of oil. In addition, both domestic and external uncertainty are undermining investment, thereby hurting longer-term growth prospects.

Brazil is experiencing a considerable slowdown this year as external demand decelerates. The global situation has also led to a reversal in the direction of Brazil’s currency. The country continues to experience strong consumer demand, but high levels of debt and default threaten to slow the consumer boom. But favorable monetary policy may set the stage for a rebound in 2013.